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Help on hard money notes

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recourse

Junior Member
What is the name of your state (only U.S. law)? CA
I purchased 2 hard money notes in CA almost 2 years ago. Last week I received a notice of default and election to sell under deed of trust on one of the notes, because my name is on the trust deed which was suppose to secure the loan. It states that I must pay $303,257 if I want to pay the debt off. However the property is only worth about $195K
Does this mean that my 2 options would be to walk away from the large amount of money I invested in this, or to pay off the debt in full. Does anyone know if there are other options, like negotiating with the bank for a much lower payoff?What is the name of your state (only U.S. law)?
 


FlyingRon

Senior Member
I'm confused. You don't have any money to walk away from if the property is only half of what you've borrowed against it. Since you say "hard money" I assume these are not acquisition loans so even if they foreclose they will still have recourse against you for the deficiency.

Banks don't really want to foreclose, they want you to pay. How far behind are you on the payments? Have you contacted the bank and attempted to cure the deficiency?
 

recourse

Junior Member
misunderstood?

No, this is not my home. It is somebody's whom I borrowed money to through a Hard Money Lender Service. I borrowed them the money that they were to make payments to me monthly at 20% interest, and then pay me the entire sum back as a balloon payment at the end of the term. I don't know the homeowners, they live 100 miles from me, this was all set up as an anonymous business transaction.
The homeowner is in default to the Lender (bank) and me. The bank started the foreclosure, sent me a notice of the foreclosure and gave me the option to pay off the homeowners debt, because I am on the title. I am on the title because that's what I was promised would secure the money I borrowed to them. Well, that security comes at a cost of $303,000! I think I was misled on how this process works, by the owner of the Hard Money Lending Service.
But in order to get my money back at all, I have to take some kind of action. I called the attorney whom I use for other business dealings, and he told me it is not a legal thing, that it is more of a business problem.
It seems to me that it would be a legal problem. Any advice is appreciated.
 

FlyingRon

Senior Member
I can't understand anything about what you are saying. You need to use the proper English words. Who set up this "anonymous" transaction? What is their role. Let me try to read between the lines.

You are solely on the mortgage to this property. You have some contract (possibly thorugh a shady intermediary) that loaned money to these other people at an egregious interest rate. They have stopped making payments. Welcome to the risk of being a lender (and why you could get 20% when banks couldn't). The down side is you are unlikely to get any of the $700B federal bailout.

If you have a prayer here you need to:

1. Continue making payments on the mortgage that you are liable for.
2. Figure out what the contract between you and the borrowrs provides for recourse.
3. Find out if there is any security interest established that would let you foreclose or evict.

You need a laywer badly. Perhaps not the one you use for business.
 

recourse

Junior Member
Obviously you don't have a clue about Hard Money Lending/Notes. And I am using proper English words! Nothing Shady happened. This is a very common form of real estate investing. Anonymous meaning, the people I borrowed the money to make payments to a service company, who in turn sends me the payments. And 20% is actually quite low in these types of transactions. As for recourse, that's what I was trying to find out from this site. But you have made this harder than it needs to be so just forget it. I will look elsewhere.
 

FlyingRon

Senior Member
Don't get snarky. "Borrowed money to" is a nongrammatical phrase. You "loan" money to someone. You were still speaking in sentence fragments and presenting the case in disconnected order. If you don't chose to rephrase it in a logical format that I am trying to elicit, nobody here can help you. A lawyer is going to do the same (or perhaps he's just gong to have you hand over all the records and figure it out for himself).

We can't tell you the recourse, because you didn't tell us what EXACTLY the contract between you, the ultimate borrowers, and the intermediary. "Anonymous" means you do not know the identity. That would be SHADY. If there's just a servicer (and the borrowers names do exist) involved, then that is different than what you said.

Yes, 20% is not unusual for a hard money loan. But the RISK IS HIGH that's why it's called "HARD MONEY." If it were a sure thing, it would be a conventional mortgage and you'd be getting 6% (plus or minus).

Ranting incoherently without providing the needed facts is going to make things hard.

I gave you the essential piece of advice. Grab all the contracts and other paperwork you have and take it to a lawyer who can sort this out. It sounds like you are beyond self-help, and nobody here can tell you without seeing the paper.
 

anteater

Senior Member
Obviously you don't have a clue about Hard Money Lending/Notes. And I am using proper English words! Nothing Shady happened. This is a very common form of real estate investing. Anonymous meaning, the people I borrowed the money to make payments to a service company, who in turn sends me the payments. And 20% is actually quite low in these types of transactions. As for recourse, that's what I was trying to find out from this site. But you have made this harder than it needs to be so just forget it. I will look elsewhere.
Primo example of why we are in the mess that we are in.
 

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